One of the pressing financial issues for businesses in central Pennsylvania, including such counties as Centre, Lycoming, Clinton, Blair, Cambria, and Indiana, is the continuing rise in healthcare costs. In these rural and mid-sized labor markets, employers face the impacts of increasing insurance premiums, workforce shortages, and ever-changing public policy, creating a expensive and difficult business climate that directly affects hiring, wages, and long-term growth and competitiveness.
The most obvious challenge is the steady increase in employer-sponsored insurance premiums. In Pennsylvania’s small group market, where many businesses in the region’s counties obtain coverage, insurers requested an average premium increase of 7.8% for 2026. For the businesses in the region such as small manufacturers, healthcare providers, and service-sector firms, seemingly modest premium hikes can end up costing employers tens or hundreds of thousands of dollars in additional annual expenses.
Local workforce shortages also contribute to these cost pressures. Healthcare systems are major employers in the region and rising labor costs within the healthcare sector, especially those experiencing labor shortages, directly impact higher insurance prices. A Pennsylvania legislative report found that healthcare-related program costs grew by 100.6% between 2018 and 2025, significantly more than the growth in the number of individuals served. This is important because employers are essentially paying more for coverage even when their usage does not increase proportionally.
The impacts on businesses in the region are numerous. First, higher healthcare costs naturally reduce profitability and limit reinvestment. Employers in counties like Cambria and Blair, where industries such as manufacturing remain important, often operate on thin margins. Increased benefit costs can limit capital investments, technology upgrades, or expansion plans. Second, rising costs influence hiring and compensation decisions. Many employers are shifting toward higher employee costs or even reducing benefits to remain financially sound. Other businesses may delay hiring or rely more heavily on part-time or contract workers to avoid the cost of benefits. The downside of this approach is to further limit the labor pool, making it harder for local firms to compete for talent, especially against larger employers. Third, healthcare costs are increasingly tied to the overall health of the workforce. Health assessments in north-central Pennsylvania identify ongoing challenges such as chronic disease, behavioral health issues, and limited access to care in rural areas. Overall poor health can increase employer costs through higher claims, absenteeism, and reduced productivity. Unfortunately for employers, health plans which include preventative services are often more costly.
Healthcare systems themselves remain a key player in the regional economy. Pennsylvania hospitals contribute $195.4 billion to the state economy and support more than 785,000 jobs, highlighting their role as both cost drivers and economic engines. For central Pennsylvania, this creates a delicate balance, controlling healthcare costs without undermining one of the region’s largest employment sectors. Addressing these issues will require coordinated efforts among businesses, healthcare providers, and policymakers to improve efficiency, expand the workforce, and enhance population health — ensuring that healthcare remains both accessible and economically viable for businesses in the region.